HDFC Bank, India’s second largest private sector lender, will be launching a digital wallet and market place for various online merchants, reports the Times of India. The launch of a wallet marks a huge shift in strategy for the lender which is currently the largest issuer of credit cards in the country – over 5.5 million outstanding credit cards at the end of October according to Reserve Bank of India data.
Speaking to the publication, the bank said that it is changing its strategy as it is seeing a shift in e-commerce from desktops to mobiles. The launch of a wallet would also enable contactless payments over mobiles using near-field communications (NFC). The bank is also pushing its customers to adopt mobile banking and recently improved its application which now allows 75 banking transactions. HDFC Bank recently beat rival ICICI Bank to the top position in mobile banking transactions. At the end of October, HDFC Bank logged in mobile banking transactions worth Rs 3,450 crore, while ICICI Bank logged in Rs 1,416 crore.
The TOI report also says that HDFC Bank is the leader in processing card payment for merchants and accounts for 40% of e-commerce transactions (a bold claim, we tried to see where they got this data from). It will also be interesting to see how their new wallet will impact existing wallet players such as Paytm and MobiKwik.
It is interesting to note that ICICI Bank earlier this month launched its NFC enabled cards in three cities. State Bank of India, the country’s largest lender, is also looking to launch its own NFC -enabled cards.
Parag Rao, executive vice president and head of card payments at HDFC Bank, said that payments on the wallet can be completed in two steps and it would cut down the failure rate of payments using cards which is currently as high as 50%. He added that customers are wary of storing their card details on third party websites and in case of the wallet, the card details are entrusted with the bank itself.
HDFC Bank is also in the process of digitizing its processes and reduce the number of physical signatures in ink. The bank will digitize the submission of Form 15H which presently has to be submitted in person at the branch by senior citizens to avoid tax deduction at source.